Our experienced and knowledgeable team will provide you with options and solutions.
Our clients are typically people who have worked hard for their money and don’t want the state to be their principal beneficiary.
They include business owners, famers, senior managers and retired people. We will give you clear and sensible advice about tax planning opportunities.
We will consider your whole situation, family as well as financial, taking into account the capital gains tax and income tax implications as well as inheritance tax. We never lose sight of your need to make sure that you yourself have enough to live on.
We appreciate that tax planning can be complex and that it can be difficult to take in all the implications in one go. We have plain English guidance notes and are happy to talk matters through with you more than once. Our Wills and Trust Deeds are also plain English.
In terms of lifetime tax planning, we can advise on:
Inheritance Tax exemptions, including
- Annual exemption
- Gifts on marriage
- Regular gifts from surplus income
Planning by using financial products, including
- Gift and Loan Trusts
- Discounted Gift Trusts
- Business Property investments
Some of these enable you to continue to receive the income from your investments while moving your capital outside your estates.
We can give you impartial advice about the suitability of the different products. We cannot recommend any individual product.
For tax planning on death, we can advise how to make the most of your exemptions, including
- Agricultural Property Relief
- Business Property Relief
- The Inheritance Tax threshold, for unmarried couples
- The Residence Nil Rate Band, especially where the estate is near £2 million or you intend to leave part of it to beneficiaries who are not your spouse or direct descendants
- The Transferable Inheritance Tax threshold, where one or both party(ies) to the marriage has been widowed previously
We can also advise on the use of trusts both to reduce Inheritance Tax down the generations, and to make sure your assets stay within the family.
Why Choose Myerson Wills Solicitors:
- Bespoke Legal Advice
- STEP Qualified Solicitors
- Home Visits Available
- Friendly & Personal Service
- No Hidden Fees
Examples of our recent work include the following:
- Advising a business owner with an estate in excess of £10m, including leaving his business assets to a trust to preserve the benefits of Business Property Relief in the event that the business is sold after his death.
- In the same matter, advising the business owner and his wife to leave their non-business assets to trusts for their sons, both of whom were independently wealthy, to reduce Inheritance Tax on their deaths.
- Advising a married couple where both had been widowed previously, using all four of the available Inheritance Tax thresholds, saving their estates up to £260,000.
- Advising clients with foreign domicile.
- Advising an unmarried couple how to make use of both their Inheritance Tax thresholds, saving a potential £130,000.
- Advising a family on a deed of variation to make use of the grandchildren’s income tax allowances.
- Advising grandparents who wished to make a gift of £400,000 to their children; including advising grandparents to create a trust, allowing the grandchildren’s income tax allowances to be used against trust income, saving thousands of pounds every year; explaining Inheritance Tax and income tax consequences; establishing trust; declaration of trust.
- Preparing Wills for a couple who lived on a small farm including how to ensure Agricultural Property Relief was available.
- Advising a business owner who was about to sell the business on making gifts into trust to take advantage of Business Property Relief and Entrepreneur’s Relief while still available.
- Advising a business owner how to structure the debt which he was owed by his company so that it would be covered by Business Property Relief.
Frequently asked questions
Do I have to pay inheritance tax myself?
Inheritance Tax is a liability of the estate and is paid out of estate funds. The difficulty is that Inheritance Tax is payable before probate is granted but the assets can’t be turned into cash without the Grant of Probate (see What is a Grant of Probate?) In addition, interest is payable on unpaid Inheritance Tax once six months have passed from the end of the month in which death occurred, currently at 3% per annum.
Where the Deceased’s bank accounts hold enough cash to pay the tax, most banks will agree to transfer the funds directly to HMRC without the need for a Grant. There is a simple HMRC form which is sent directly to the bank requesting payment.
Where the estate does not have the cash to pay the tax, certain institutions will loan money to the Personal Representatives to allow them to pay the tax.
The loan can be repaid from the proceeds of sale of the estate assets.
How is inheritance tax calculated?
Each individual has an “inheritance tax threshold”. At the moment this is frozen at £325,000. This means that the first £325,000 of a Deceased’s estate is free from inheritance tax (“IHT”). The value of the estate which exceeds the threshold is taxed at a flat rate of 40%.
There are a few things which may reduce the IHT payable, for example, no IHT is payable on assets passing to registered charities or on certain business assets. More commonly, assets passing to the Deceased’s spouse will be “spouse exempt” so no IHT is payable on those assets.
Further, if a Deceased’s tax threshold is not used in its entirety, either because the assets are exempt or because the value of the estate does not exceed the threshold, the unused tax threshold is transferred to the surviving spouse to be used upon their death. In essence, this means that married couples have a combined tax threshold of £650,000.
When is inheritance tax payable?
Inheritance Tax (“IHT”) is payable when someone dies and on certain lifetime transfers.
IHT on death
If the estate does not exceed the tax threshold (currently £325,000) or if the estate is spouse exempt (see How is inheritance tax calculated?) then no tax will be payable. However, an Inheritance Tax account must still be filed. If IHT is payable on the estate, this must be paid before the expiry of a 6 month period starting at the end of the month of death.
For example, IHT on deaths occurring on 1 January will be payable by 31 July of that year. An instalment option is available on certain assets such as land and property.
IHT on lifetime transfers
IHT may also be payable during someone’s lifetime. For example, if a trust is created and the value of the assets transferred into the trust exceed £325,000, IHT will be payable at 20% on the value above the tax threshold. For certain trusts there are ongoing IHT charges.
We recommend that professional advice is taken in relation to the creation of any lifetime trust.
Do you pay interest on inheritance tax
Tax is payable on the anniversary of 6 months from the end of the date of death. Any tax not paid by this date will accrue interest.
The rate of interest is currently 3% and this accrues daily. Inheritance Tax Accounts are due 12 months from the end of the month of death.
Where the account is not filed by this date HMRC can charge an initial penalty of up to £100 with a daily charge of £60 for every day that the account is not filed.
How We Can Help
A member of our specialist team will be happy to help.
To discuss Inheritance Tax Planning issues, please either use the contact form on the right, email us at firstname.lastname@example.org or call us today on +44(0)161 941 4000 to speak to a member of our team.